Microsoft worked closely with US intelligence agencies to intercept users’ communications, going as far as helping the NSA break the company’s own encryptions, new secret files handed over by Edward Snowden have revealed. Before the launch of the new Outlook.com portal, Microsoft helped the NSA circumvent encryption used by the service, after the agency expressed concerns that it would not be able to read messages sent through the new system. The documents show that the NSA had long held pre-encryption stage access to emails sent through Hotmail. Microsoft also worked with the FBI to explain an Outlook.com feature which enabled users to create email aliases. In a statement to the Guardian, Microsoft said, “When we upgrade or update products we aren’t absolved from the need to comply with existing or future lawful demands.” The company also worked to allow the NSA easier access to its cloud storage service SkyDrive via the Prism data collection programme. Microsoft previously denied all knowledge of Prism and said they had never given the government direct access to its servers. Microsoft’s most recent marketing campaign was launched in April with the slogan “Your privacy is our priority”.

Sticking with the Redmond giant, Microsoft CEO Steve Ballmer has outlined a major structural overhaul of the software giant, an approach that he has dubbed “One Microsoft.” The move is intended to boost collaboration and communication amongst Microsoft’s various teams and products. Ballmer outlined some executive shuffles and departures, including Kurt DelBene, who will retire as president of Microsoft’s Office division, having been at the firm since 1992. Going forward, Terry Myerson, who has served as head of Windows Phone, will be executive vice president of the operating systems engineering group. Rick Rashid will no longer run Microsoft Research and will instead focus on OS innovation within the OS group. Meanwhile, Craig Mundie – who previously announced plans to retire next year – will be working on a “special project” for Ballmer through the end of 2013. “Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work, and on the go, for the activities they value most,” Ballmer said. For more on the shakeup, follow the link above.

A “virtual Lolita” posing as a 14-year-old girl has been trialled on Google Chat to try and catch out paedophiles. All major web and telecoms companies are under pressure from the UK government to find solutions that can address public fears about the prevalence of online paedophiles, and the widespread availability of child porn on the Internet. The “Negobot” developed by researchers from the University of Deusto, near Bilbao, uses artificial intelligence (AI) software to chat and mimic the language used by teenagers. The virtual Lolita will start talking online in a neutral manner but will adopt one of seven personalities according to the intensity of interactions and suggestions made. One of Negobot’s creators, Dr Carlos Laorden, said that in the past “chatbots” have tended to be very predictable. In contrast, the Negobot uses advanced decision-making strategies known as “game theory” to simulate convincing chats as they develop. It can also take the lead in conversations, and remember specific facts about what had been discussed previously. In response to requests for personal information it is able to to ask for mobile numbers and other social network information of predators in response, information that can then be handed over to police for further investigation.

Billionaire business mogul Carl Icahn has said he plans to raise his $15.4 billion (£10.1 billion) offer to take over computer maker Dell. In May, Icahn lost out when the company’s board recommended that shareholders should accept a $24.4 billion (£16 billion) offer led by founder Michael Dell. Mr Dell, the company’s chairman and CEO, believes that the company needs to be removed from the stock exchange and privatised in order to progress without the pressure of scrutiny from shareholders. The founder hopes to move the business away from PCs and onto mobile devices and business software. His offer would give shareholders $13.65 (£9.01) per share in cash. However, Icahn and Southeastern Asset Management, who together own 12 per cent of the company, have resisted the deal, arguing that it is not a fair offer. They have urged other shareholders to join them in pressing for legal action to get more money for their stock. Icahn said his new offer will pay around $20 (£13.21) per share. Speaking on Bloomberg Television, he argued that it is time for Michael Dell to leave the company.